Merck, Walmart, IBM, & KPMG's FDA Blockchain Pilot: Here's What We Learned

By Pravin Chandran and Linda Kristoffersen, KPMG

IBM, KPMG LLP, Merck & Co. Inc., and Walmart Inc. successfully completed an FDA pilot program that demonstrated how blockchain technology can be used to help meet the Drug Supply Chain Security Act (DSCSA) requirements to verify, track, and trace prescription medicines and vaccines distributed within the United States.  The pilot team also identified opportunities for blockchain extensions beyond the regulation, with KPMG translating the program’s findings into potential new applications of this emerging technology that will benefit the healthcare and life sciences sectors.

The FDA announced the pilot program in 2019 to consider “all viable technologies and methods from the pilot projects that will support enhanced product tracing and verification. DSCSA has been in effect for several years and authorized trading partners in the drug supply chain are expected to have the appropriate systems and processes in place.” The law, which was signed in 2013, is being implemented in stages and eventually goes into full effect in 2023.

Blockchain is software that acts as a shared ledger among all the trading partners, which allows information to be divulged among companies while maintaining privacy and not exposing data can be viewed as a competitive advantage.

Pilot Program Results

With the amount of data and number of participants involved in tracking and tracing medications throughout the supply chain, the pilot showed that blockchain can connect disparate IT systems and different organizations to have a common view of product traceability in the market.

An additional benefit the pilot team uncovered is that blockchain can reduce the time it takes to alert the supply chain of a product recall from a few days to a few seconds. This enhanced communication processes can identify recalled product within a supply chain network, and remove the risk of a recalled medication being dispensed. In addition to dramatically shortening the time it takes to effectively communicate recalls, blockchain might allow the industry to narrow the scope of recalls to just those specific products where the integrity was compromised within the supply chain (unit or case level vs. lot level).

The full report about the blockchain pilot with Merck, Walmart, IBM, and KPMG is available online (click here).

“The pilot program showed that blockchain could help meet FDA’s DSCSA requirements and also potentially serve as a tool to increase patient safety,” says Craig Kennedy, head of supply chain for Merck. “We now need to take what we have learned and work with others across the healthcare system to create a standard for DSCSA interoperability based on blockchain and continue to demonstrate how it can be efficiently integrated into existing systems.”  

The four companies worked closely to study blockchain’s effectiveness for tracing prescription drugs and vaccines. The pilot successfully integrated a blockchain-based system from IBM with Merck’s existing industry-standard system for serialization.

KPMG led the functional design of the pilot, including the process workflow, user interface development, defining configuration requirements for IBM’s blockchain platform, and overall integration to demonstrate compliance with the DSCSA. “Alongside our distinguished partners, we look forward to applying this technology to bring more transparency to the entire supply chain for vaccines and prescription drugs,” said Mark Treshock, IBM’s global solutions leader for blockchain in healthcare and life sciences.

Merck used two of its vaccine products, which were already dispensed at Walmart,  to simulate product movement and trigger investigations and recalls to test the ability to flag a product to be removed from the market and also measure the response times. Additionally, to demonstrate the ability of the solution to integrate into the current ecosystem of systems, the team added a global software company, SAP ATTP, one of several companies that provide GS1 compliant serialization solutions to the industry’s leading pharmaceutical companies.

Blockchain’s Broader Implications

Beyond blockchain’s potential to track and trace medications and the benefits uncovered during the FDA pilot, there are additional implications for the healthcare  and life sciences sectors. The technology’s security, interoperability, and capabilities to track an array of data make it a very effective tool for a variety of pharmaceutical applications.

Modernizing The Supply Chain

DSCSA compliance is a logical application of blockchain, since the underlying objective of the law is to track and trace medications to introduce increased control and safety in the pharmaceutical supply chain. Similarily, the concept of introducing traceability and trust across a complex network can be applied to verify, track, and effectively distribute personalized therapies such as CAR-T and streamline processes associated with delivery and management of Risk Evaluation and Mitigation Strategy (REMS) products, where pharmaceutical companies are subject to increased regulatory oversight and reporting requirements. In addition to track and trace, blockchain can operate with internet-enabled sensors in packages containing temperature-sensitive products. If a product is exposed to temperatures that diminish the product’s quality, the blockchain can alert the supply chain trading partners that the product needs to be removed from salable inventory.

Accelerating R&D And Clinical Trials

As a technology, blockchain can be applied in circumstance where great amounts of data need to be compiled in a secure environment with defined regulatory or audit requirements — for example, in clinical trials. Patient identity must be secure, but the array of data collected in a clinical trial can be effectively organized and shared with what the parties need to know in a randomized, controlled clinical trial, including the measurement of the trial’s endpoint.

Smart Contracts

Blockchain can provide pricing transparency and streamline the myriad of financial settlements associated with getting the drug from factory to pharmacy to patient, while addressing details of health benefits, drug rebates, and chargebacks.  

Supporting Artificial Intelligence

Blockchain’s shared ledger acts as a trusted source of data to fulfill the use of artificial intelligence in life sciences. It acts to keep “bad data” in check when developing algorithms to uncover insights from data. The secure nature of blockchain also has a role in protecting intellectual property, since it shares information with only those who need it.

What Needs To Happen For Blockchain To Make An Impact For Pharma?  

As a technology integrated with standard business processes, blockchain is at a similar stage to where the internet was in the 1990s. It is still on the horizon, but it has the potential to be everywhere that assets need to be tracked digitally across a network to serve as a “ledger of truth,” and future investments in this space are expected to be similar to how businesses saw a need to build an online presence as the internet became ubiquitous.

The implications are far reaching for finance, inventory and supply chain management, and data collection and dissemination. Applications of blockchain that touch the patient are slowly beginning to emerge and include:

• Obtaining consent to contact individuals about potential clinical trials
• “Immunity passports” in response to COVID-19 that allow individuals to certify disease status while protecting their data and identity
• Medical adherence tracking and secure communication back to providers
• Digital tokens in lieu of traditional copay cards
• Provide transparency into drug pricing for patients, other entities in the value chain and for public as a whole.

As much as e-prescribing reduced the risk of an incorrect prescription being dispensed, blockchain can take this to the next level, and this where that digital health model can take hold in life sciences. Many treatment regimens are complicated, especially for patients with multiple chronic conditions. A consumer focus in healthcare is also driving more care to be delivered outside hospitals and other clinical settings, either via home care or telehealth, highlighting a need for information sharing.

Blockchain can have a foundational role in tracking the bits of data tied with the treatment, the dispensing of medications, benefits coordination, and sharing that information with healthcare providers involved in the delivery of care in these diverse care settings. The value of these potential new care delivery models involves variables tied to clinical need, healthcare providers, technological enablement, and benefit coordination.  The overarching goal is to reduce data silos, overhead, and miscommunication across stakeholders to improve patient outcomes, provide a better patient experience, establish greater accountability, and/or lower healthcare cost  

As novel as blockchain is in pharma, it has already become part of an ecosystem that includes cloud computing, analytics, artificial intelligence (AI), automation and the Internet of Things (IoT) in the financial services, retail, and energy sectors. These converging technologies are being used in R&D and supply chain, and in a post COVID-19 world, we anticipate there will be greater adoption on the commercial side, as they become part of a digital backdrop that allows clinicians to focus on patient care and ensure medicines are safely reaching patients. 

About The Authors:

Pravin Chandran is a director in KPMG’s Innovation and Enterprise Solution Center of Excellence. He uses his understanding of the real-world application (and limitations) of blockchain, machine learning, and cognitive computing to help clients grasp how emerging technology can drive value for their business. He helps his clients develop practical digital strategies, establish AI centers of excellence, and deploy reporting, advanced analytics, and blockchain-based solutions. He has over 16 years of experience in the life sciences industry and has served eight of the top 10 manufacturers.

Linda Kristoffersen is a manager in KPMG’s Innovation and Enterprise Solution Center of Excellence, where she leverages her deep industry experience to drive forward innovative blockchain-enabled solutions, primarily focused on supply chain, quality, and regulatory compliance for clients in the pharmaceutical and life sciences industry. She has several years of experience implementing DSCSA and global serialization programs aimed to improve patient safety by preventing counterfeit medication and product diversion, and she recently served as the KPMG lead for the FDA pilot work focused on DSCSA compliance and assessing blockchain’s applicability to address key challenges the industry is facing with the regulation.